Thursday, April 24, 2008

There is simply no alternative to an effective advertising campaign. You may have the best product in the world, but if your advertising campaign falls short, it could all be in vain

A question for you – which company kickstarted the fast moving consumer goods (FMCG) industry in India? If your answer is Hindustan Lever Limited (HLL), I would not blame you. Out of every ten television commercials, HLL accounts for more than half. No wonder, one tends to forget that Dabur was the company that introduced the concept of FMCGs to India. During 1999, HLL spent Rs.7,154 million on advertising, which was 600% higher than what Dabur, the next largest advertiser, had incurred. With thousands of new brands jostling with the old and existing brands for occupying the mind-space, we are in for a brand clutter. And the rule is sparklingly clear – Only the one who tells more (that is, spends more in marketing, advertising and promotion), sells more!

In 2006, HCL completed its 30 years and it realised that – forget the consumers – even its own recruits didn’t know how much the company does. HCL is a dominant IT player; and yet, other players have become more visible than it. It was time for some serious brand building. The company decided to go on a high-decibel advertising spree, spending crores on brand building. As I said earlier – if you spend more, you sell more. The more visible you are, the better your chances of success will be.

It’s highly debatable who is a better candidate for the Presidency of America. Is it Clinton with all her years of experience or is it Obama with his promise of bringing about change in the country, coupled with his youth & charisma. However, at this point in time in the race for the White House, the only factor responsible for the success of any political campaign strategy is ‘Money’!

In the first week of April, for 8 days, Barack Obama spent an average of $400,000 a day on TV ads, totaling to an ad spend of almost $3 million. Hillary Clinton’s campaign was still below $1 million. If Obama continues to spend like this, his chances of wining Pennsylvania are almost sure and this “ad crush” would ensure his Democratic nomination and Hillary’s ouster from the race. Obama is the one with deep pockets and that gives him the power to do more – to recruit more, travel more and most importantly, advertise more.

Once is not enough

Luxor is one of the oldest brands in the country and also a market leader in the writing instruments segment. D. K. Jain, Chairman & President, Luxor says, “We have been the market leader for more than two decades, yet we feel the need for a new campaign, because many tend to forget domestic brands in the face of a host of multinational brands, which are now present in India.” That’s the key factor. Public memory is very shortlived and you need to remind it constantly that you exist.

Barista and Café Coffee Day are in for some serious “brand thinking”. With international chains like UK’s Costa already in and Starbucks gearing to come to India, our own domestic chains are getting cold feet. The biggest problem is most chains still don’t have enough of a national presence, neither do they have enough margins for mass media advertising. They are now going to be pitted against competitors who are coming to India with big reputations and big marketing budgets.

The secret to success is ‘sustenance’. You need to sustain your communication effort over the long term. Just launching a great product is not enough; you need to tell the world about it repeatedly. According to a popular advertising theory, it takes a minimum of nine repetitions before the consumer actually considers your advertisement seriously and wonders if it amounts to anything. By the 13th time, he thinks what you are advertising is a good thing. By the 14th time that he sees the same ad, he remembers he wanted such a thing for a long time. By the 19th time, he counts his money carefully and by the 20th time that he sees the advertisement, he goes and buys the article. Yes, a minimum of 20 repetitions is required before the first purchase. What it is tantamount to is that in today’s marketplace, the one who makes the maximum noise wins. Not just a good product but a large budget too is required. Barista may be as good as Costa or Starbucks, but the one who advertises more will garner more market share.

Learning from the movies

Earlier, producers used to keep aside 10% of the making cost of a film for advertising. Times have changed drastically since then. These days, the major studios have annual advertising budgets that run from Twentieth Century Fox’s $185 million to Disney’s $300 million. Today, marketing a movie costs almost as much as making it.

In 1995, a movie that cost $35 million to produce could cost $30 million to advertise; the definition of advertising itself has changed. It’s no more confined to newspapers, magazines or TV, but also includes T-shirts, caps, comics books, mugs and whatever you can think of. Every movie, mainstream or independent, big or small, needs as much hype as it can get, regardless of its quality.

Last year, SpiderMan-3 was released. Made on a budget of $258 million (making it the most expensive film ever made) and backed by high voltage advertising, it muscled off a better albeit smaller, less grander film London to Brighton out of theaters. Though the story of the latter was more gripping and the lead actress got nominated for many awards, the film, due to its low advertising budget, couldn’t stand up to the might of the Hollywood biggie SpiderMan-3. Back in India a small budget film Mithya was released neck-to-neck with a biggie – Jodhaa Akbar, starring two of India’s most loved heartthrobs Hrithik & Aishwarya. Yet, it was the marketing of Mithya with full page ads in the newspapers that helped it sustain the mighty Jodhaa Akbar and run to packed houses for weeks. Even in movies, the first week run shows a strong relationship between attendance (i.e. ticket sales) and advertising.

The invisible factor

Great advertising may not add new features to your product, but it makes it desirable by changing peoples’ perception about it. It’s the invisible hand that steadily builds the product.

However, many a time, especially when business is not good, our instinct demands that we cut down the advertising budget.

Business cycles come & go and research has proved that those with the determination and courage to maintain and even increase their advertising budgets, no matter what comes their way – recession or boom – are in fact the ones who, in the long run, reap a major sales advantage.

Continuous advertising sustains market leadership and it’s commonsense that maintaining your position is much better than recovering lost ground. So don’t stop advertising when the going gets tough. Remember, during the Great Depression, it was Kellogg that had the guts to increase its spending, and till today, its market leadership remains strong.

Harley Davidson, Nike, Starbucks are some very popular global brands. They have reached “cult” status. If you analyse them carefully, you realise that the one thing that they never compromised on was advertising.

There’s a theory that the more you advertise, the less effective your ads become. When you are new, you create an impact, but as you become familiar, your ads lose their punch. So you cannot have the same budget – you have to increase it to reach out to the consumers; or else, the competitor will overshadow you. No wonder, the very top brands have remained at the top because they have been backed by large, ever-increasing advertising budgets.

Marketing & advertising are matters of great vision & commitment; as the marketplace gets cluttered, these become very expensive commitments and only those who have deep pockets will sustain.

A great product is necessary to make a mark but the one who advertises the most, the one who creates the maximum noise, wins in the long run. So go ahead and be fearless, and go out there with determination, for if you need to win in the market, you need to make some noise...

Thursday, April 10, 2008

Marketing expenses of US President hopefuls are rising by the day. The 2008 election campaign may well see ad spends crossing $5 billion. There’s a lesson in it for Indian political candidates

“Change we can believe in” or “Yes we can” are popular slogans in America today. They are not punch lines of a popular shoe brand or apparel manufacturer, but of a political candidate. The political campaign in America has been the most exciting and as Election Day nears, it gets more and more intoxicating. Obama, Hillary or McCain? The verdict stands suspended. The aura, the election fever has been most dramatic, more exhilarating than even the best suspense thriller you can think of. The campaigns of the three candidates are lessons in advertising and marketing. The three products (candidates) have used all the rules & principles available in the book. However, the most interesting product and my personal favourite is Barack Obama. The man has shown the world the power of advertising & promotions. Surprising but true, today a political candidate can be marketed like a box of cereals! With a name like Barack Hussain Obama, the man could have been a loser from the word go. A name almost rhyming with Osama, he could have been a lost case, especially after the 9/11 attacks. Yet, today he is fast becoming the blue-eyed boy of America. He was a total misfit – a black, young and inexperienced and half Muslim. Intelligent campaigning turned it all in his favour. According to Time magazine, Obama’s campaign turned out voters 25 years of age and younger, in record numbers. It was not just sheer charisma that helped him do it, but also sophisticated marketing techniques like Micromarketing. Here, by layering typical demographic data with psychographic data, they found new voters. With the help of indicators, like which TV shows you watch, which magazines you subscribe to, which car you own, which club you belong to, et al, with near certainty they found out potential voters (something similar was done by Bush). Once the voters were identified, they were called up by people like them. So veterans called veterans, high school students called up high school students and convinced them in their own unique ways to come and vote.

Obama knew old party loyalists would be difficult to convince. It was those who had yet to form strong opinions that were easy to swing in his favour. A shrewd move; something similar to what Howard Dean had done in 2004, when he campaigned intensely on college campuses. It is these first-time voters who turned out in record numbers and gave him most of his margin of victory. This under-25 set – the most elusive of all voters everywhere – gave Obama a net gain of 17,000 votes and helped him defeat Hillary at Iowa.

The Marketing of a President

Obama’s campaign is unfolding with clockwork precision. There is a systematic branding effort behind everything. No wonder it’s working. Every Presidential candidate of America has been marketed to the people, however in Obama’s case, for the first time, it’s being done in a manner similar to the marketing effort of any high-end consumer brand.

Brand Obama has a cool logo, cooler t-shirts for supporters. His viral video “Yes we can” received 6 million hits. It became so popular that it was soon developed into an on-line community where you could post your own version of “Yes we can.” A successful brand is one, which connects with the people. In Obama’s case, the focus was not ‘Obama’ but the idea, the idea of change... of hope. It worked. Every part of the campaign focused on this. So much so, that to drive home the point, a website hopeactchange.com was created. The logo, with a blue circle and red & white stripes, stood out most distinctly. Every single banner had the same font type – something even corporate clients find difficult doing with their campaigns! According to Michael Bierut, a leading graphic designer, Barack’s campaigns are flawless. He is the only candidate to have a coherent, top to bottom, 360 degree system at work. His campaign scores as high in designs & quality as any of America’s best brands like Target or Apple or Volkswagen.

Assassinations, not ads

Back in India, the situation is totally lackluster. Campaigns only have a limited impact on elections. Print campaigns are read by only the educated few. Around 80% of rural households can still not afford black & white TV sets.

Back in 1980’s, a man whose smile made you skip a heart-beat did use a professional agency for his political campaigns. Rajiv Gandhi & Congress spent Rs.40 crore in 1989 on advertising. However, his sales pitch, “My heart beats for India” failed to move the voters. In 2004, BJP spent almost Rs.100 crore on the ‘India Shining’ campaign but lost, while Congress which hardly spent much, won. In fact its been the two assassinations (in 1984 & 1991) that actually made a whole nation cry together and vote with their hearts. The Congress saw a landslide victory in 1984 and a decent win in 1991. No planned ad campaigns have ever been able to generate such fervour. No party has approached elections with proper thought & planning, and created campaigns powerful enough to move people.

In the recent past, Narendra Modi’s political campaign did show some sparks of innovation and creativity. The party’s poll theme, ‘Jeetega Gujarat’, focused on Modi. Only a few ads hit out at the Congress. Modi used hoardings, TV commercials and even a website to impress the young voters. He even got masks of his face made (similar to the ones made for Hillary & Bush in USA). The masks, made in China, generated a lot of curiosity, especially among the common people, who had never seen something like this. Modi used TV Gujarat and Zee Gujarat to reach out to his voters. Congress too used TV, but focused on national channels, which sadly diluted its efforts. It’s local focus that works here. In West Bengal, a CPM candidate had a string of three thousand kites with his message written on each of them. They were later cut off so that they could land all over his constituency. Bengal loves kites and his efforts were appreciated. In the south, Jayalalitha used her Jaya TV to promote herself and her party. Locally specific, well-tuned, well-timed, low-cost, but high-relevance promotions are what can make a party successful in India.

The changing face of political campaigns

It may not have taken off in a big way in India till now, but in future, only well marketed candidates and parties would be able to influence the voters. The one with a market-oriented approach would succeed, that’s for sure. Just as successful brands need to appeal to consumers, candidates must appeal to voters. With radio and television spreading their reach every year – they are fast becoming the media that are shaping peoples opinions. Candidates need to use them to reach out to larger audiences.

Consider this. He was finished, declared a loser, even before the election race started. The Jennifer Flowers scandal (she squealed on her 12-year relationship with Bill Clinton), when he was running for President, ensured that Clinton was left with nothing when America went to polls in 1992. Then, Clinton & his wife went on air to accept and confront all allegations in the popular programme “60 Minutes.” That Sunday night, as millions hung on to every word the Clinton’s spoke – marketers congratulated each other quietly – their campaign was rocking. Bill Clinton used all possible marketing tools like focus groups, telemarketing, et al, to emotionally connect with the audience, who forgave him & voted him to power.

With each passing year, elections are getting more expensive. It’s not just the creative, but the one with deepest pockets who will survive. In 2004, George Bush and John Kerry spent about $600 million on TV & radio ads. This was three times more than what Al Gore & Bush spent in 2000. This time, it’s estimated that in 2008, political ads spending figures could surpass $5 billion.

The best part is great ads work. Back in 1964, the ‘Daisy’ ad was shown only once in America on CBS. It showed the image of a girl picking petals off a daisy juxtaposed with the image of an atomic bomb exploding and was intended to raise fears about the opposition candidate’s inclination to start a nuclear war. Though the ad was withdrawn immediately, it was shown numerous times in the news and most senior Americans still remember it.

Televised political advertising began in 1952. It has been evolving continuously ever since. Hubert Humphrey used comparative ads to attack Richard Nixon. John F. Kennedy used lyrics like “a man that’s old enough to know, but young enough to do” in his ads. In the 1980’s, Ronald Reagan came out with “feel good” ads with happy times, smiling faces.

This year, Obama has a new message. He is asking his voters to create an ad for him. “Obama in 30 seconds” is asking you to make an ad for Obama & the winning ad would then be aired nationally.

Yes, just like soaps and shampoos, it requires only a few seconds to create a leader. To create those winning seconds, you need to work hard. But remember, the one who markets and advertises will win. The future belongs to the 30-second candidate.

About Me

Rajita Chaudhuri is the Dean , Center for Higher Education @ IIPM. She is the Consulting Editor of '4Ps,Business&Marketing' magazine and 'MYOD'. She is the winner of the "Best Faculty in Marketing".Her passion is teaching.

Prof. Rajita Chaudhuri speaking at 'Thorns to Competition' book launch

IIPM 4Ps Bschool Quiz with SRK

Prof. Rajita Chaudhuri's Executive Communication Class - April 2011

Prof. Rajita's Class on Team Building

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